* Q4 EPS ex items 22 cents vs Street view 20 cents
* Q1, full-year outlook generally in line with Street view
* Sees full-year operating margin expanding 1 pct point
* CEO says customers not as scared as a few months ago
* Shares rise 8 percent in extended trading
(Adds forecast, CEO comments, updates shares, byline)
By Jim Finkle
BOSTON, March 25 Linux software maker Red Hat
Inc (RHT.N) reported profit ahead of Street projections on
Wednesday , helped by cost cuts and a stock buyback, sending
shares up 8 percent.
Chief Executive Jim Whitehurst said that business sentiment
has improved, with customers telling him they feel the economy
is in a ordinary recession, rather than a depression.
"I don't think people are quite as scared as they were a
couple months ago," he said in an interview. "A couple months
ago people were really worried we were falling off a cliff. It
has stabilized since then."
He issued forecasts for the current quarter and full fiscal
year that were generally in line with Wall Street projections.
Profit, excluding items, of 22 cents per share, for its
fiscal fourth quarter ended Feb. 28, beat analysts' average
forecast of 20 cents, according to Reuters Estimates.
Revenue rose 18 percent to $166 million, versus the average
forecast of $167 million, as the company persuaded existing
customers to sign bigger deals when they renewed subscriptions
on service contracts.
Red Hat -- whose rivals include Novell Inc NOVL.O and
Microsoft Corp (MSFT.O) -- makes money by offering services
such as upgrades, help-desk support and bug fixes to
open-source Linux software that is also available at no
The software maker has started a "free-to-pay" marketing
campaign to persuade businesses that they would save money by
subscribing to its services because they would not have to hire
as many Linux programmers.
Whitehurst said that the company signed up many customers
through that program during the quarter, including one multi
Red Hat also managed to boost revenue by persuading
existing customers to expand the size of their contracts. The
value of the 25-largest renewal subscriptions signed during the
quarter was 32 percent higher than the original deals as
customers expanded capacity and added new features.
Red Hat forecast that full-year revenue will grow between
10 percent and 13 percent this year to $720 million to $735
million. Analysts were expecting revenue of $735 million.
It projected full-year profit, excluding items, of 58 cents
to 62 cents, versus an analyst forecast of 59 cents.
The company also forecast that it will report first-quarter
profit, excluding items, of 13 cents to 14 cents, on revenue of
$171 million to $173 million. Analysts were expecting profit of
13.5 cents on revenue of $172 million.
The company reported fourth-quarter net income fell to $16
million, or 8 cents per share, from $23 million, or 10 cents
per share, a year earlier, when it had more shares
Shares of the Raleigh, North Carolina-based company rose 8
percent to $16.22 in extended trading, from their New York
Stock Exchange close of $15.00.
(Reporting by Jim Finkle; editing by Richard Chang and